Kenya Airways may need up to Ksh100 billion in new funding to stay afloat, the Business Daily reports today, quoting analysts at Standard Investment Bank. The airline, which reported a Ksh29 billion pretax loss for the full-year ended June 30, 2015, requires urgent cash infusion to reduce the its debts.
“Kenya Airways needs new funds in the region of Ksh80 billion to Ksh100 billion,” says Eric Musau, an analyst at SIB. Treasury Cabinet Secretary Henry Rotich, whose ministry has a seat on the KQ board, said at the weekend that a plan was under way to inject up to Ksh60 billion into the company.
The airline also announced it had signed a Ksh20 billion loan from the African Export Import (Afrexim) Bank. The anticipated new round of equity financing is expected to see the government’s ownership in KQ grow from the current 29.8% as retail investors are likely to avoid pumping new money into the airline having booked major losses due to the sharp fall in its share price.
“The key is to reduce the debt burden as much as possible. The company also needs to take some tough decisions and become a smaller airline,” said Mr Musau.
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